Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 6

Suppose an economy has a production possibility frontier characterized by the equation X 2 + 4Y 2 = 100
a. In order to sketch this equation, first compute its intercepts. What is the value of X if Y = 0? What is the value of Y if X = 0?
b. Calculate three additional points along this production possibility frontier. Graph the frontier and show that it has a general elliptical shape.
c. Is the opportunity cost of X in terms of Y constant in this economy, or does it depend on the levels of output being produced? Explain.
d. How would you calculate the opportunity cost of X in terms of Y in this economy? Give an example of this computation.